Principle Amt: $5000, 8% compounded continuously;
How many years would it take for the investment to grow to $7000?

Question

Principle Amt: $5000, 8% compounded continuously;
How many years would it take for the investment to grow to $7000?

anonymous · Answer

Anybody know the formula?

anonymous · Answer

A = P e^ (rt)

anonymous · Answer

ok, now we have A=5000^(.08*t) ?

anonymous · Answer

A=5000 * e^(.08*t)

anonymous · Answer

sorry that is what I meant....how do you solve for t now?

anonymous · Answer

What's A?

anonymous · Answer

$7000

anonymous · Answer

Right, we are trying to grow from 5000 to 7000?

anonymous · Answer

Yep, make sense, so plug it in in order to to figure out t :)

anonymous · Answer

7000=5000e^(0.08*t)             LN both sides   to get LN7000=e^(.08*t)  ?
Or do you subtract 5000 from 7000 then LN both sides to get LN 2000 = e^(.08*t) ?

anonymous · Answer

7000=5000e^(0.08*t) 
-> e^(0.08*t)  = 7/5
LN both sides :

anonymous · Answer

so you divide 7000/5000 and 5000/5000 to separate the e^(.08*t)?

anonymous · Answer

Always!

anonymous · Answer

so it should now read LN (7000/5000)=.08*t ?

anonymous · Answer

ok, got it!!! Thanks for all your help!!!

anonymous · Answer

The steps always the same :)